Retailers brace for tougher times

KUALA LUMPUR: The retail industry is expected to contract this year but all is not gloom and doom. Some shopping destinations and brands are bucking the downward trend and are going ahead with their expansion.

For instance, hypermarket chain Tesco bought a piece of land in Perak to expand  operations; while Mydin Mohamed Holdings Bhd is looking to employ 1,200 workers to man their new hypermarkets in Melaka and Kelantan.

Malaysian Association for Shopping and Highrise Complex Management (PPK) president Joyce Yap said the retail sector is still holding up well.

“About 75% of our members reported traffic count has remained consistent over the past six months,” she said.

Sectors which seem to be holding up are IT shops and quality F&B outlets. However, fashion retailers are harder hit and wish rents are lowered.

“As expected, there is always resistance from landlords (on the issue of lowering rental),” shares British India CEO Pat Liew.

Datuk Farah Khan, president of the Melium Group, which markets luxury labels like Hugo Boss, Pucci and Stuart Weitzman, concurs.

“I wish the landlords would urgently address the (rental) situation,” she says.

Whereas, FJ Benjamin Malaysia CEO Angie Chong sees the need for a strong partnership, “It is crucial for both retailers and malls to be proactive in finding a win-win situation,” she says.

Retail Group Malaysia managing director Tan Hai Hsin said he expects the country retail sales to contract in 2Q2009, slipping into negative territory before strengthening in 3Q2009.

However, some malls are ensuring that tenants are not in dire straits. Developer of I Utama Shopping Centre in Petaling Jaya, See Hoy Chan Holdings director Datuk Teo Chiang Kok said the complex has put in play a crowd-pulling strategy.

“We are running a RM1 million ‘cash back’ incentive programme to stretch the ringgit of our shopper, which will result in more turnover for our tenants,” he added.

Suria KLCC, on the other hand, feels its prime location is key to helping tenants attract customers particularly tourists. “…We are fortunate enough to be part of a world-class integrated development…that makes our centre a ‘must visit’ location,” shares CEO Andrew Brien.

Although there is no clear cut solution to the global slowdown, it is clear Malaysia’s multi-billion ringgit retail industry that employs over 300,000 people is heading into choppy waters. Therefore, it is imperative key industry players and the government draw up viable solutions to deal with the contraction in domestic demand.

Read the full report in the April 4, 2009 issue of City & Country, the property pullout of The Edge Malaysia